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State terminates Office Depot contract

After six months of trying to help Office Depot work through problems it had with pricing and other issues, state officials recently terminated a multimillion-dollar contract.

The Delray Beach, Fla.-based company had been the state's sole office supplier since March, doing about $40 million's worth of business a year. State employees purchased pens, paper, printers and office furniture among other things through an online catalog.

Joe Kim, a spokesman for the Department of Administrative Services, said the state is changing how it manages contracts.

"When the contract was awarded there was no expiration date," Kim said. "We set up new parameters in the process of transforming our procurement function and Office Depot happened to be holding a contract at the time."

On top of that, Kim said the state was no longer willing to devote so much staff time and effort to clean up the mistakes in pricing and problems with substituting out-of-stock merchandise.

Office Depot spokesman Jason Shockley said the company consistently addressed issues raised by the State of Georgia in a timely manner, and it's surprised by the decision.

In a letter addressed to the company earlier this month, the administrative services department said it recently did a test with 10 commonly used products and five were priced incorrectly.

"That may not have been a representative sample of the 18,000 products Office Depot carries, but it was part of an ongoing pattern," Kim said.

Upon receiving notice of the termination, Office Depot objected to its suspension from eligibility for future contracts by the State of Georgia and requested a hearing on the suspension.

The initial investigation was sparked by allegations from the National Office Products Alliance, a trade association for independent office products dealers. A news release issued by the organization states that Office Depot overcharged the State of Georgia by more than $1.2 million in the past 10 months, a charge that Office Depot denies.

"Office Depot has aggressively investigated all allegations of incorrect pricing, and has worked with the State of Georgia to correctly implement changes in a timely manner," Shockley said in a written statement. "Additionally, any pricing errors that occurred have been, or are in the process of being, remedied in the form of credits back to the State of Georgia. Office Depot remains ready and willing to continue to fulfill our obligations to the State."

As a result, the state no longer has an official statewide contract for office supplies. According to a letter sent by the administrative services department to Office Depot, state agencies are now authorized to purchase office supplies on the open market from any vendor, including Office Depot.

"While there is no statewide office products contract currently in place for the State of Georgia, Office Depot will continue to provide office products to state agencies in Georgia through an open market sale process," Shockley said.